Consideration: Heritable Building Right vs. Property Purchase / Renovation

Hmm... but the statement only applies if the municipality sets the ground lease fee at a reasonable rate. I already mentioned earlier: if the municipality demands such a high ground lease that after 25-30 years one has paid the current value of the property through the lease, the difference between the hypothetically financed purchase price and the ground lease quickly turns negative.

3% return is reasonable and not high. The alternative is not to get the desired plot. Additionally, the lease in € is lower than the installment at the bank. Thus, families can afford a house they otherwise could not.

Ok. Apparently, I’m thinking wrong. Seems like a cool thing to have paid the land value (not the standard land value!) as a lease for 25-30 years. And then continue paying. When I sell the house after 40 years, I get exactly 0 for the land. Cool! Why don’t we all just continue renting? Whether the ground rent is actually lower than the monthly installment depends on the financing period of the land. If I want to have it paid off after 20 years, the ground rent is of course lower. Otherwise, it gets pretty close to the monthly installment. As I said: I’m talking about the outrageous prices around here—not about the cheap offer from the OP. By the way, the 3% doesn’t seem that cheap. Last year, the plots were real hard sellers despite the crazy demand. We could have had one immediately and still had a choice of 4 plots. For municipal land plots for sale, about 50 interested parties per plot apply.

Besides: Working economically does not mean making the maximum possible profit,

Yes it does. Exactly that is what it means. Or achieving a given profit with the minimal possible input. (Minimal-/Maximal principle)

and by the way the municipality also has a social responsibility, and even in NRW one is moving further away from highest bid procedures. It just has to be desired accordingly by the city council.

Let me guess: in East Westphalia, in the Eifel, in the deepest Bergisches Land, they follow the path you described. But definitely not within striking distance of Düsseldorf. NRW is simply not equal to NRW. Even here there are popular areas and the outback.

The social aspect is handled differently here (e.g. affordable rental of properties to large families by the municipal utilities).

Yes. That’s exactly what it means.

Maybe for you. The municipality is satisfied with just covering costs, or where is your interpretation based on?

Let me guess: in East Westphalia, in the Eifel, in the deepest Bergisches Land people follow the path you described.

Almost. I actually meant various municipalities in the Ruhr area, and yes, even for them free plots of land are like gold dust.

Ok. Apparently, I'm thinking wrong. It seems like a cool thing to have paid the land value (not the standard land rate!) as lease payment after 25-30 years. And continue paying afterwards.

No, of course that's not cool. If you can afford it, it's better in the long term to buy the land than to lease it. But you have to be able to afford it. And for many, the bank simply shuts down when an already expensive house is combined with an additional 200-250 thousand for land. And 3% yield is not cheeky but in many areas a lower standard. A private investor will usually expect a higher return.

Seems like a cool thing to have paid the land value (not the standard land value!) as a lease after 25-30 years.

Ownership is cooler. But totally uncool not to have land and to kick yourself because you didn’t take the stupid hereditary building right. And 3% is cheap for that.

If it were that easy for the OP, he wouldn’t have asked and been desperate that otherwise he would have to buy land hundreds of kilometers away from his friends.

And when selling, the land is by the way not valued at €0 in your balance sheet. For a hereditary building right in a good location, you can ask for a good amount of money as a surcharge for the house.

Maybe I’m just unbiased because I A) have been doing real estate financing for over 20 years and B) come from the Ruhr area, where hereditary building rights are as normal as daily bread. I even live in a hereditary building right or rather in an apartment as hereditary building right (even though it has since been sold). The selling price was identical to apartments with full ownership. So I was paid for my land share even though I only lease it. And we’re talking about the Lower Rhine, not a metropolis.